Car company bosses have been dreaming about mining riches from the iconic Jeep brand since Willys was sold to Kaiser Motors in 1953. Until now, it's been nothing but a fantasy.
Last year, Fiat Chrysler Automobiles NV's (FCA) Jeep brand passed the one-million mark in global sales. Chief executive officer Sergio Marchionne told Bloomberg television last October that Jeep will hit the 1.9 million sales target by 2018, saying Jeep may "even blow through it." Jeep has become the thriving, money-making machine so many have vainly tried to make it. A miracle, really.
Remember, Jeep sales cratered to 200,000 in 2009. Jeep sales have since exploded with only the reinvented Grand Cherokee of 2010, the new Cherokee launched last year and various styling tweaks to the existing lineup. Jeep president and CEO Mike Manley points out that last year "every vehicle in the Jeep lineup recorded significant worldwide sales gains." Jeep's global sales were up 39 per cent.
More is coming. Jeep is adding the new Renegade, a made-in-Italy small SUV to the lineup, while also adding local manufacturing in Brazil and China. Jeep plans to add a seven-seat flagship Grand Wagoneer in late 2018, while the Compass and Patriot will be replaced by a single model in 2016. The Grand Cherokee will get redesigned in 2017, the Wrangler in 2018 and by decade's end, Jeep will have six models.
The secret to Jeep's success isn't much of a mystery, however. FCA has been spending hundreds of millions, billions on Jeep, realizing that to make money in the car business, you need to invest in the products and sharpen the marketing. Obvious as it is, no other owner in Jeep's history has done this to such a degree.
Ah, Jeep's sad history. American Motors Corp. (AMC) bought money-losing Jeep in 1970, eyeing the potential for fat profits. Never came. France's Renault SA thought investments in AMC would help yield fat Jeep results, too, but that never happened.
Chrysler Corp. bought AMC in 1987, thinking Jeep was a diamond in the rough. Well, Chrysler did have some success with Jeep in the 1990s, especially with the Grand Cherokee, which became somewhat of yuppie trophy until yuppies learned that Grand Cherokees of that era leaked like a sieve – water dripped into the cabin from the windshield to the back window, with engine and transmission fluids all over the driveway.
Along came Daimler AG, which took control of Chrysler in the late 1990s – the so-called "Merger of Equals." Dieter Zetsche, a career Daimler exec who was appointed Chrysler CEO, poured money into Jeep, championing the Liberty and other products. Ultimately, however, Daimler made a hash of Chrysler; Jeep became an unrealized asset once again.
Rather than invest more money in what the German bosses saw as a losing proposition, Daimler essentially gave Chrysler to Cerberus Capital Management, which, of course, saw untapped potential in the Jeep brand. Alas, Cerberus appointed a former hardware salesman to head Chrysler and of course failed to invest in new products and models. The results were predictably catastrophic.
Most observers felt Cerberus planned to do what leveraged buyout artists do best: lop off and sell the valuable parts of a company, and let the rest wither and die. Jeep, the Ram pickup and Chrysler's minivans had value, but when the financial crisis and global recession came along in 2008-09, Cerberus walked away just as Daimler did.
Then Canadian and U.S. taxpayers came on board with a massive loan – since repaid – that allowed Chrysler to solider on and reinvent itself. Some still debate the value of the auto maker bailouts, but they're foolish to do so. Chrysler may now be part of a Dutch conglomerate based in the Netherlands with headquarters in London, and whose North American affiliate no longer has the name of Chrysler founder Walter Chrysler as its corporate moniker, but the former Chrysler Corp. is alive and kicking, employing tens of thousands and planning to hire more.
FCA has managed to do something with Jeep that so many before it could not do – from Kaiser Motors to American Motors, Renault, Chrysler, Daimler and Cerberus. Looks like with FCA, seven's the charm for Jeep.
Like us on Facebook
Add us to your circles
Sign up for our weekly newsletter